Perfecting Legal Regulationgs On Insurance Fund Investment In Stock Market

In recent years,the insurance industry has developed rapidly with accelerated development of domestic economy.Accompanying with the increasing new records of insurance premium for successive years,the balance of insurance fund is also accumulated rapidly.How to use insurance fund well,preserve or increase its value has become the reflection of core competitiveness of various insurance companies.In face of problems such as low return on assets and asset allocation based on serious loss of interest difference,many insurance enterprises choose to invest insurance fund into stock market thus to keep up pace with Chinese economic reform and opening-up.The positive interaction between insurance market and stock market not only meets with the requirement of numerous insurance funds realizing high appreciation rate but also conforms to the national will of financial institutions supporting industrial entity economy,while the insurance fund of institution investors can better give play to its role of stabilizing stock market.However,insurance fund also faces not-so-trivial investment risks when it prevails in the stock market of high yield rate.Under the situations of immature investment idea of domestic insurance enterprises and imperfect development of stock market,the insurance fund will face larger investment risk,while the supervision loophole for insurance market and stock market will be more prominent.Based on “raising paddles by relying on insurance fund”,the hotspot events have appeared,such as “war between Baoneng-Wanke”,“raising paddlesfrequently of Anbang Insurance” and short-term stock investment of Evergrande Life,while these small and medium-sized insurance enterprises have been criticized to be“barbarians” and “pests”,which leave a bad impression to the public.How to solve the supervision pains in the stock market investment process of insurance fund,provide better institutional guarantee and risk hedging environment for insurance fund investment in stock market in the new round of financial supervision process,and guarantee insurance fund to realize benefit demand under the situation of meeting with supervision requirements are the research and discussion emphases of this paper.Chapter I consists of two parts.Wherein,Part I introduces the concept of insurance fund and necessity of insurance enterprises using insurance funds to preserve or increase the value and consolidate payment ability.According to the existing supervision regulations,it conducts concept contrast in order to understand the latest “legal” concept of insurance fund.The author compares the latest definition of insurance fund in article 3 of Insurance Fund Application and Management Methods published in January of 2018 with the definition in article 3 of previous applicable Temporary Management Provisions of Insurance Asset Management,points out the new regulations delete the concepts including “operation fund”,“other liabilities” and “various assets formed based on the above funds” but replace them with save clause of “other funds”,which shortens the application scope of insurance fund on purpose to prevent insurance companies from using insurance fund for speculation behaviors through illegal operation from the perspective of supervision regulations.Part II centers on interaction between insurance market and stock market to point out that stock market is the investment channel of insurance fund to realize high appreciation rate and the platform channel for insurance companies to perfect their industrial layout,meanwhile,insurance fund will have important influence on real economy and stock market stability.And then the paper holds that insurance fund has large potential in spite of various problems in the stock market investment process,therefore,it should be further perfected in the supervision system and regulations.Chapter II conducts international comparison from the aspects such as supervision mode of insurance industry,interaction between insurance market andcapital market as well as regulations on insurance fund application,introduces related supervision modes and regulations of the countries owing developed insurance markets such as America,Britain,Japan,EU,Canada and Singapore,or having distinct characteristics in insurance fund application field.Wherein,it especially stresses the district regulations on insurance fund supervision of the above counties.For example,America establishes perfect supervision system;EU countries pay high attention to payment ability of insurance enterprises and make strict regulations;Japan makes regulations on insurance fund investment limit;Singapore and Canada formulate regulations on insurance fund investment information revealing;Singapore formulates regulations on derivative instruments and hedging instruments;Canada establishes independent operation mechanism on old-age pension.Chapter III firstly looks back to the history of domestic insurance fund investment in stock market and current situation,based on this,adopts the method of observing general situation based on particular situation,persists in problem-orientation and focuses on the special situation of insurance companies raising peddles in the stocks of listed companies.It analyzes the motives of listed companies in raising peddles based on insurance fund include subjective and objective reasons.The subjective reasons include insurance companies facing pressures of“asset-driven liabilities” and “interest rate decline” as well as realizing listing and financing through raising peddles.The objective reason lies in supervision proportion limitation relaxing of supervision department in insurance fund investment in stock market.Besides,it further points out that the listed companies based on insurance fund face severe challenges and supervision pains from possible four risks,including liquidity risk caused from term mismatch,loss risk of interest difference caused from cost benefit mismatch,systematic risk caused from extreme situation of capital market and operation risk caused from equity competition.Chapter IV transfers from particular perspective to general perspective,aims at the insurance fund investment in stock market from the perspective of listed companies based on insurance fund,under the situation of financial supervision reform,stresses institutional design of regulations,proposes the suggestions on furtherperfecting supervision regulations on insurance fund investment in stock market,strives to solve bottleneck problems and difficulties through top-level design and the supporting mechanism mode.It proposes four suggestions on supervision regulations on insurance fund investment in stock market:Firstly,establish the four-beam and eight-column supervision pattern of “led by Financial Stability Development Committee of State Council,supplemented by multiple-supervision mechanism”.The Committee should give play to its mainstay role: the “The People's Bank of China,China Banking and Insurance Regulatory Commission and China Securities Regulatory Commission ” should undertake the specific responsibility of penetration-type supervision in specific supervision process,avoid grey supervision belt of “divided supervision of railway and policemen”;meanwhile,establishing a set of systematic and important supervision system for financial institutions suitable to domestic financial market situation with the rapid development of domestic financial market and financial institutions is the urgent affair,which will take precautions for preventing and solving systematic risks.In addition,the competition between foreign-capital insurance companies and national insurance enterprises will be more fierce in the historical development process of reform and opening-up deepening,the practice of “government-base” will not last for long time,but competition-based reform can promote long-term development of domestic insurance market,therefore,formulating a set of exit mechanism for insurance enterprises becomes the important guarantee for benign competition between enterprises based on insurance fund.Forming the four-beam and eight-column supervision pattern of “led by Financial Stability Development Committee of State Council,supervision and coordination of The People's Bank of China,China Banking and Insurance Regulatory Commission and China Securities Regulatory Commission,paying attention to supervision of SIFIs and supplemented by perfecting market exit mechanism” is the trend of insurance industry supervision and even financial supervision,and the most important arrangement for insurance fund investment in stock market.Secondly,strengthen asset-liability matching management of insurance company,especially the asset-liability term matching.Thirdly,take hedging-based insurance fund stock index futures market as purpose to establish the hedging mechanism of stock market investment,which will supplement the institutional design of insurance fund investment in stock market,reduce investment cost and risk,restrict adverse influence from non-rational investment and abnormal fluctuation of market.Fourthly,the specific supervision regulations should also rely on perfectness of insurance fund investment idea,asset management team professionalization of insurance industry and independent operation of insurance fund.Only in this way can insurance fund investment in stock market achieve accumulated effect thus to provide institutional guarantee for interaction and win-win of insurance market and stock market.